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Busting the money men

U.S. soldiers in Mosul act like a racketeering squad to cut off the cash flowing to insurgents

Mideast edition, Thursday, September 27, 2007

MOSUL, Iraq — Earlier this year, while searching a propane factory for bomb-making materials, American soldiers based in Mosul discovered several hidden coffee cans stuffed with money.

Suspicions arose among the soldiers of the 2nd Battalion, 7th Cavalry Regiment, 4th Brigade, 1st Cavalry Division.

The owner of the business said he was hiding the thick wads of large-denomination bills from his wife, said the 2-7’s commanding officer, Lt. Col. Eric Welsh, 42, of Hershey, Pa.

“But you just knew that something was not right,” Welsh said. “You could just tell that something stinks.”

The war in Iraq is often viewed as an ideologically fueled conflict with insurgents fighting for religious, sectarian and political causes. But soldiers with the 2-7 have discovered that, at least in Mosul, the driving force behind hostilities is often considerably baser.

“It’s driven by money,” said Capt. Jakub Andrews, 30, of Los Angeles. “So much of it is like a mob mentality.”

During their effort to target the financiers of the insurgency, soldiers have stumbled onto an underworld of nefarious schemes that calls to mind the ruthlessness — and ingenuity — of crime syndicates around the world.

“It’s like the ‘Sopranos’ here,” Welsh said, referring to the HBO series. “Anywhere there’s money to be made, there’s a racket.”

Organized crime is nothing new in Iraq. Smuggling has long been an intrinsic part of Iraq’s black market economy, most notably under Saddam Hussein. Many of these criminal networks have not gone away, but have simply adapted to new conditions since the arrival of American troops.

For racketeers in Mosul, the price of doing business now typically includes paying a percentage to insurgent fighters and nominally becoming part of the anti-Western movement. But ultimately Mosul’s “white collar” criminals are devoted to profits and not causes, Welsh said.

“Ultimately in this area of operations it is about money and power,” Welsh said. “It always gets back to money. And anywhere money can be made, there’s a way to extort, embezzle, strong arm and steal money.”

Well-covered tracks

Soldiers with the 2-7 began a concerted effort to target the financiers of the insurgency in April, unit leaders said.

Unit leaders felt it was not enough to target those who built and placed roadside explosives, but also those who funded the threat.

“It takes money to buy military-grade munitions. It takes money to bring in foreign fighters,” Welsh said. “The bottom line is to fight a war, it takes money.”

But tackling Mosul’s criminal underworld was, at first, easier said than done, unit leaders recalled.

As Welsh often points out, his is the only battalion assigned to a city with 1.8 million to 2.5 million inhabitants.

And the racketeers will make sure that their scams are well hidden, their tracks are covered and, even when the heat comes down, that they are found holding nothing incriminating.

“Your typical finance guy has no weapons in the house, no evidence,” Welsh said. “You have very educated people up here, it becomes a battle of wits, a cat-and-mouse game.”

Andrews added: “We were looking for these guys a while without knowing what we were looking for.”

But persistence has begun to pay off, 2-7 unit leaders said. The Iraqi security forces in the area have helped several investigations with their cultural and societal expertise, they said.

Criminals “reveal things to Iraqi interrogators that they would never tell us,” Welsh said.

Cement scam

With several investigations still open, Welsh said he could not reveal the names of the detainees he has taken into custody. But he did share details of some of the criminal enterprises brought down in the last few months.

Earlier this month, soldiers detained a man working with several large cement factories in the region, arranging contracts.

When the man was apprehended, he was carrying a check for more than $130,000 and had hundreds of thousands of dollars more in several bank accounts.

With his connections to al-Qaida in Iraq, the man had muscled into a job as a middleman for the government-owned cement factories. He arranged for contracts with little to no documentation so there would barely be a paper trail leading back to him, Andrews said.

He would sell cement at an inflated price to contractors while getting the resource at a discount from the factories. He pocketed the difference and was making roughly a $100,000 a month, Andrews said.

It was an open secret among local contractors that business with the cement factories meant business with this particular man, Andrews said.

“He had ties to high-level guys, high-level al-Qaida guys,” Andrews said. “It may never have been spoken out loud, but people knew if you had to buy cement you had to deal with this guy.”

Soldiers would not reveal what led to the man’s arrest, saying only that “human intelligence” contributed to the investigation.

During questioning, the man said that he paid his al-Qaida benefactors by depositing money into a bank account. After that, he said, he did not know where the money went, Welsh said.

Real estate racket

A second recent arrest involved a racketeer tapping into another government-run enterprise. There is a lot of money to be made buying and selling real estate in Mosul, one of the country’s largest cities, Welsh said.

“There are a lot of people with a lot of houses,” he said. “There are homes ranging from $40,000 to $400,000.”

Soldiers detained an employee with the government real estate office who was illegally selling properties and pocketing the money. The man would alter the deeds of government-owned properties and sell them as privately held lots.

Again, 2-7 unit leaders would reveal little of their investigatory process but when the man’s home was searched, a ledger detailing his illegal transactions was found under a baby’s crib, Welsh said. The real estate employee had recorded transactions totaling billions of Iraqi dinars in the ledger.

Apparently, racketeers have taken note of the Americans’ reluctance to search women and children and have tried to take advantage, Andrews said.

The captain recalls that in another case, a female soldier searched a woman and found she had hidden a cell phone and money underneath her breasts. “She was a very large woman,” Andrews said. Racketeers “are great at hiding stuff, their caches are some of the most incredible things,” he said.

Kidnapping targeted

Soldiers with the 2-7 have recently broken up a kidnapping ring. Victims from some of the wealthier families of Mosul were chained by their hands, feet and necks as the kidnappers waited to collect ransoms that often ran upward of $250,000, Welsh said.

The unit has also turned its attention to several car dealerships that may be selling stolen cars and providing vehicles to bomb makers, Welsh said. After soldiers recently showed up at one suspect dealership, the owner closed it down, he said.

And the owner of the propane factory who claimed to be hiding a small fortune in coffee cans from his wife turned out to be selling propane and fuel on the black market, according to 2-7 leaders.

The man would make fake identification cards to falsely claim rations of propane, which he would in turn sell.

Welsh said that the sale of propane and fuel on the black market funnels about $1 million a month back to the insurgency.

The owner was also providing materials for the building of bombs as well as providing fuel to insurgents, Andrews said.

“I don’t think he was very politically inclined or religiously inclined,” Andrews said. “I think he was in it for the money.”

With all the money the United States is pumping into the rebuilding of Iraq, Welsh said he would be surprised if some of the funds did not find their way into the hands of criminals.

But generally, he said, it is a lot easier for the racketeers to make money on scams that do not include American oversight, inspection and possible intervention.

Since April, unit leaders estimated they have arrested from 20 to 30 swindlers and insurgent financiers.

As scams are put out of business, insurgents are pressured to find money in other places, Welsh said.

“I’m not going to tell you that we understand it all but we are making it uncomfortable for them,” he said.


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